Ex-Iceland PM In Dock Over Banking Collapse

Iceland's former prime minister has become the first world leader to go on criminal trial over the 2008 financial crisis.

Geir Haarde is accused of negligence in failing to prevent the financial implosion from which his country is still struggling to emerge.

Haarde, 60, became a symbol of the get-rich bubble economy for Icelanders who lost their jobs and homes after the country's main commercial banks - Landsbanki, Kaupthing and Glitnir - collapsed during his leadership, sending the currency into a nosedive and inflation soaring.

Thousands of people in Britain and the Netherlands lost life savings held in Landsbanki's Icesave accounts, triggering a three-year diplomatic row.

The trial is being held at a special court, the Landsdomur, which was founded to deal with criminal charges against Icelandic government ministers and is being convened for the first time in Iceland's history.

Prosecutors have accused the former leader of failing to implement recommendations drawn up by a government committee in 2006 to strengthen the country's economy.

Haarde has rejected the charges, calling them "political persecution".

He told the court that the committee's work could not have prevented Iceland's economic crash, and that the government did not fully understand how much debt the country's banks had on their books.

In the immediate aftermath of the crisis, as unemployment and inflation skyrocketed, a wave of public protests forced Haarde out of government in 2009.

Some have argued that the financial meltdown in Iceland - which has a population of around 330,000 - was tied to the global crisis and the government could not have predicted or prevented it.

But a parliament-commissioned report put much of the blame on Haarde and his government, saying that officials "lacked both the power and the courage to set reasonable limits to the financial system".

Haarde has pleaded not guilty and has sought to have all charges dismissed, calling the proceedings "preposterous".

He has claimed his "conscience is clear" and insisted his "guiding light" was the interests of Icelanders while blaming the banks for the crisis.

Robert Wade, a professor of political economy at the London School of Economics, argued for "accountability at the top of the system".

But he said: "There's a fair bit of sympathy that it's somehow unfair to put Haarde on trial on his own.

"But it's better that somebody goes on trial than nobody, because there was very clear ministerial irresponsibility."